Instead, our focus has been on expanding global breadth. We believe the burgeoning participation in international markets is constructive for US markets, specifically for cyclical areas.
But are we beginning to see any signs of breadth expansion domestically?
In today’s post, we'll switch gears and turn our attention stateside to address participation among US stocks.
Let’s dive in!
Here’s a look down the cap scale at all three S&P indexes, from large to small:
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Industrial metals have been one of the strongest subgroups within the commodity complex over the trailing year.
The parabolic advance in Steel futures off last year’s lows is an excellent illustration of this.
But lately, we see more and more commodities shift toward sideways trends in the intermediate-term. And lots of them are doing so trapped beneath overhead supply.
A quick glance at charts like crude oil or copper tells this story well -- the last four months have been a chop fest for most.
Despite government officials trying to explain it away, inflation is running at its highest levels in years or (in the case of producer prices) decades. For now, however, the bond market shows little evidence of concern. After pulling back from 1.75% to 1.15%, the yield on the 10-year T-Note has risen in recent weeks but remains below 1.40%. It has bumped up against that level but has not been able to get through it. German yields have moved higher recently and seem to be giving US yields a green light to break out. Resiliency from Financials even as yields were retreating in Q2 and Q3 also argue for an upside resolution here. The high P/E, speculative growth sectors of the market ran out of steam when yields moved higher earlier this year and they could be vulnerable again if yields make a sustained move to the upside from here.
The big indexes offered us a little pullback this week which has been helping us identify the true standouts -- the stocks that are holding up best in a down tape. We're all about relative strength at All Star Charts as it is one of the most reliable indicators for us. And true leaders really identify themselves when they are swimming against the current while markets are sliding.
So on days and weeks like this, we're paying very close attention to the strongest sectors and keying in on the strongest stocks to see how they react.
Today, one those names is in the Capital Markets space where we're seen tremendous strength this year.
We questioned whether this consolidation would resolve in the direction of the primary downtrend--in which case we would expect a break lower.
Or maybe buyers would step in and defend those former lows once again.
Despite the lack of bearish momentum readings, many of you wanted to sell on a break below support, citing the primary trend as a major deciding factor.
And that's basically where our heads were, too, as it's always easier to go with the trend.
So what are we selling? Or should I say... buying?
The chart was the Small-Cap Technology ETF $PSCT… but it was inverted!
So those who wanted to sell on a breakdown were actually buyers, and vice versa.
Here’s a fresh look at the chart, right side up this time:
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridg
Money really likes to flow where it's treated the best… and as far as sectors and even most industry groups go, there simply isn't much alpha out there at the moment.
In analyzing relative trends, we’re always aware of how the overall stock market is performing against defensive assets.
In today’s post, we’re going to check in on those sectors investors pile into when seeking safety as opposed to positioning for risk.
Utilities, Real Estate, and Staples... the “bond proxy” groups. Let's dive in.
Here's a custom index of them all charted relative to the broader market.
Notice how the relationship has stopped trending lower since it bottomed back in July.
Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for five to nine years.
We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money.” Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
Labor Day weekend in Wisconsin usually means one last summer trip up north for one last summer swim in the lake.
For me, this also meant the final jump off the giant raft we built (a ton of steel sitting on 12 barrels, with multiple jumping platforms and a slide that ends six feet above the water). Then, it was time to bring it back to shore to disassemble it for winter storage.
Driving south toward Milwaukee at the end of the long weekend, I saw all sorts of summer toys being towed home for the winter. While it was not quite as warm as in August and the sunset came a bit sooner than it did in July, it was still a lovely evening and a chance to look back and also look ahead.
Our live Monthly Strategy Session concluded last night. For all the premium subscribers, this is where you can access/rewatch the video.
This post is an exercise we do for the non-members to give them an idea of the research we carry out at All Star Charts.
The Monthly Strategy Calls started out as a selfish endeavour whereby we wanted to stay in the loop and follow the big-picture trends. It's like recentering your navigation system to avoid taking the wrong turn. Then we realised this could be helpful to you guys as well! Just to step back and identify the larger trend.
